We studied the process of elastogenic differentiation in the bovine ligamentum nuchae to assess the mechanism that regulate elastin gene expression during development. Undifferentiated (nonelastin-producing) ligament cells from early gestation animals initiate elastin synthesis when grown on an extracellular matrix (ECM) substratum prepared from late gestation ligamentum nuchae. ECM from ligaments of fetal calves younger than the time when elastin production occurs spontaneously in situ (i.e., beginning the last developmental trimester at ~180 d of gestation) does not stimulate elastin production in undifferentiated cells. Matrix-induced differentiation requires direct cell matrix interaction, is dependent upon cell proliferation after cell-matrix contact, and can be blocked selectively by incorporation of bromodeoxyuridine into the DNA of undifferentiated cells before (but not after) contact with inducing matrix. Quantitative analysis of elastin synthesis in younger cells after matrix-induced differentiation indicates that the entire cell population is competent to respond to the matrix inducer, and continued synthesis of elastin after younger cells are removed from the ECM substratum indicates that the phenotypic transition to elastin synthesis is stable and heritable. Although ligament cells do not require continuous contact with ECM to express the elastin phenotype, elastin synthesis is increased substantially when elastin-producing cells are grown on ligament matrix, suggesting that elastogenic differentiation is stabilized by ECM. The matrix substratum was also found to alter the distribution of tropoelastin between the medium and matrix cell layer. When grown on tissue culture plastic, ligament cells secrete >80% of newly synthesized tropoelastin into the culture medium. When cultured on ECM, however, 50-70% of the newly synthesized tropoelastin remains associated with the cell layer and is cross-linked to form insoluble elastin as shown by the incorporation of radiolabeled lysine into desmosine.